Futures buoyed by Fed price comments; dollar weakens

Bloomberg

US equity futures rose Tuesday along with European stocks after Federal Reserve officials played down the risk of persistent inflation. A gauge of dollar strength against a basket of peers headed for the lowest level since January.
The Stoxx Europe 600 index was on track for a fresh record high, with technology stocks boosted by results from Aveva Group Plc and Sinch AB’s share offering. Vonovia SE falls as much as 6.8% after it agreed to acquire rival Deutsche Wohnen SE for about $23 billion in the biggest-ever takeover in in European real estate, though news of the deal buoyed the sector as a whole.
The Fed comments aided sentiment, as officials reiterated they expect transitory rather than lasting price pressures from the US economic rebound. Treasury yields ticked lower.
Fed officials Lael Brainard, Raphael Bostic and James Bullard said they wouldn’t be surprised to see bottlenecks and supply shortages push prices up in coming months as the pandemic recedes, but that much of those gains should be temporary. While market-based measures of inflation expectations have dipped, investors remain cautious about the risk of a pullback in stimulus. They are also monitoring Covid-19 spikes in regions such as Asia.
“Monday’s lethargy seems to have been shaken off after a chorus of Fed voices delivered dovish statements, downplaying arguments for early tightening,” said Nema Ramkhelawan-Bhana, an analyst atRand Merchant Bank in Johannesburg, “Let’s not forget that it only takes one inflation print to unsettle investors or a strong economic figure to guide nominal yields higher. And so the lesson is to make hay while the sun shines.”
Elsewhere, Bitcoin held gains Tuesday after Elon Musk’s effort to bolster the token’s green credentials stoked a rally, extending a bout of marked volatility in the wake of last week’s crypto rout. The largest cryptocurrency remains about $25,000 off its mid-April record.
Oil retreated after the biggest two-day gain since March as investors tracked a recovery in demand that may enable the market to accommodate any fresh flows from Iran should the nation’s nuclear deal be revived.
The Stoxx Europe 600 rises 0.4% as of 9:32 am London time and futures on the S&P 500 also rise 0.3%. While futures on the Nasdaq 100 rise 0.5%, the MSCI Asia Pacific Index climbs 1.1% and the MSCI Emerging
Markets Index rises 1.3%.
The Bloomberg Dollar Spot Index falls 0.1% and the euro rises 0.3% to $1.2248.
While the Japanese yen was little changed at 108.77 per dollar, the offshore yuan rises 0.1% to 6.4011 per dollar and the British pound surges by 0.1% to $1.4173.
The yield on 10-year Treasuries dipped one basis point to 1.59% and Germany’s 10-year yield declined one basis point to -0.15%. Britain’s 10-year yield was little changed at 0.81%